An investigation into the factors affecting adoption of NZS/ISO 9000 in New Zealand and the benefits gained by certified companies : a thesis presented in partial fulfilment of the requirements for the degree of Masters of Technology in Quality Systems at Massey University

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AN INVESTIGATION INTO THE FACTORS AFFECTING ADOPTION OF NZS/ISO 9000 IN NEW ZEALAND AND THE BENEFITS GAINED BY CERTIFIED COMPANIES

A THESIS PRESENTED IN PARTIAL FULFILMENT OF THE.REQUIREMENTS FOR THE DEGREE OF

MASTERS OF TECHNOLOGY IN QUALITY SYSTEMS AT

MASSEY UNIVERSITY

David John Dobbin

1994

ABSTRACT

It was believed that there was a lack of knowledge of the real factors that hindered or helped ISO 9000 implementation and that many companies set out to gain certification without a clear understanding of what resources are required, the factors that may hinder the implementation oflSO 9000, or the actual benefits they may achieve.

This thesis investigates the factors that affect the implementation of ISO 9000 in New Zealand, and the actual benefits gained. It is the result of personal discussion and correspondence with currently practicing quality consultants, and a survey sent to every certified company whose listing was available and to a random selection of non-certified companies in New Zealand.

Two objectives formed the foundation of this research. The first was to identify the factors that actually affect ISO · 9000 implementation in New Zealand companies. This included factors that help and factors that hinder ISO 9000 imPfementation. The second was to determine the benefits that companies claim to derive from ISO 9000 implementation and certification.

The research was conducted in eight steps:

i) A literature search was conducted in order to gain an understanding of the types of issues surrounding quality systems implementation and the possible benefits gained.

ii) Letters were sent to Quality consultants currently practicing in New Zealand asking for their perspective and experience of the factors that affect ISO 9000 implementation and benefits actually gained.

iii) Development of a self-administered survey questionnaire.

iv) A pilot trial of the first draft of the survey questionnaire was conducted with intended local certified and non-certified survey recipients.

v) The survey administered as a mail-out questionnaire directed to company managers. A total of 190 questionnaires were sent to certified companies, and 809 to currently non- certified companies.

vi) Information collation, tabulation, and storage stage.

vii)

A

follow-up survey of one hundred and nineteen companies of a similar distribution throughout New Zealand as the original non-certified sample was conducted to determine the intentions of those companies with regards to ISO 9000 implementation in order to verify that the non-certified survey responses that were received were not biased towards companies with an interest in ISO 9000.

viii) Analysis and collation of the research findings.

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The factors found that actually affect ISO 9000 implementation in New Zealand companies in order of incidence are:

1. Company culture 10. Degree of realisation of the benefits 2. Management commitment 11. Communication

3. Existing systems 12. Responsibility and authority definition

4. Training 13. Business barriers

5. Complexity of operation 14. Customer

6. Resources 15. Magnitude

7. The facilitator 16. Suppliers

8. The market 17. Planning

9. Management practices 18. Scope

The benefits gained by companies certified to ISO 9000 in New Zealand in order of incidence are:

1. Enhanced existing systems 7. Communication

2. Market improvements 8. Definition of Responsibility/ Authority 3. Reduction in total costs 9. Technology ·

4. Training 10. Resources

5. Formalisation of procedures 11. Continuous Improvement and TQM¹ 6. Employee Benefits and Company Culture 12. Product and/or Service Quality

Future benefits expected by certified companies (post-certification) as a result of ISO 9000 implementation and certification, in order of incidence are:

1. Market improvements

2. Continuous improvement and Total Quality Management 3. Reduced total costs

4. Improved management practices

5. Surveillance audits ensuring continued internal compliance to procedures 6. Employee benefits

This study was conducted with the sponsorship of KPMG Peat Marwick in an effort to address the growing need to understand the factors that affect the implementation of ISO 9000, and the benefits to be gained, and is aimed towards gaining better control of the implementation process.

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1. TQM ii an abbreviation for Total Quality Managanml

4

ACKNOWLEDGMENTS

I would like to express my appreciation for kind assistance given by the following people:

Mr Bryan Wenmoth,

Senior lecturer at Massey University, Palmerston North. My supervisor for this research, for his guidance and supervision.

KPMG Peat Marwick,

Wellington, for their sponsorship, in particular Mr John Baker, and Ms Denise Riches. Without their assistance this research would not have proceeded.

Mr Ted Drawneek,

Consultant, Computing Services Centre, Massey University, for his assistance with the computer package SPSS 4.0 used in data collation and tabulation.

Ms

Glennis Wallbutton,

Data Entry Clerk, Computing Services Centre, Massey University for her assistance with data entry.

Ms Jenn if er Matthys,

my Fiance, for her untiring support throughout the creation of this thesis.

I would like to thank the following Quality practitioners for their generosity in sharing with me their perspective's, knowledge, and experience of the actual factors that affect ISO 9000 implementation, and benefits gained :

Stan Bunting, MAF

Allan Cook,

Operations Manager Dairy Services,

MAF Diane Baguley,

Quality Assurance Services Ltd

Brian Filmer,

Quality in Projects Associates

Tom Gusscott,

Morgan & Banks Limited

Stewart Hobbs,

Senior Engineer, KRTA Limited

Graeme Hollyman, NTMS

Clive Jennings,

Metal Test Ltd

Ranjit F.J. Keshvara,

Executive Consulting Service

Fiona MacKenzie,

TELARC

Dermot McNerney,

Business Development Manager,

TRADENZ Bryan Melville,

Bryan Melville Consulting Group Ltd

Bob Mills,

Head,

MIRINZ

John L. Mills,

Principal, John L. Mills & Associates Ltd

Bob Nelligan,

Principal, RJ.Nelligan & Associates

David Scarf e,

Executive Director, AOQ

Brian Taylor,

Institute of Quality Assurance, London

Alan L Trenberth,

Consultant, Business Development Service Ltd

Richard Treadgold,

Director, The Manual Makers Ltd

Greg Williams,

Quality Systems Auditor, Quality Assurance Services

s

Many thanks go to the following people/companies who each gave a considerable amount of time to trial the pilot survey:

Ross Hutson,

South Pacific Aluminium, Hamilton Les

Amyes,

Printpac UEB, Palmerston North

Roger Coates,

Anchor Dairy Products, Hamilton

Mark Hanlon,

Trigon Packaging Systems, Hamilton

Tony Salisbury,

Timpack Industries Ltd, Hamilton

Tom Hingston,

Sunbeam Ltd, Palmerston North

Michael Scott,

Allflex, Palmerston North

Lars

Olsson,

Boniface Brothers (P.N.) Ltd, Palmerston North

Finally, I would like to acknowledge my kind appreciation of all those companies that responded to the questionnaire. A full listing is given in Appendix 1.

TABLE OF CONTENTS

1 1.1

1.2 1.3

2

2.1 2.2

2.3

3 3.1 3.2 3.3

3.4 3.5 3.6 3.7 3.8

3.9 3.10

4

ACKNOWLEDGMENTS TABLE OF CONTENTS

LIST OF FIGURES AND TABLES INTRODUCTION

Objectives Method

Responses Received

LITERATURE SEARCH, AND THE EXPERIENCES OF PRACTICING QUALITY CONSULTANTS IN

NEW ZEALAND

Factors that Affect ISO

9000

Implementation Benefits

Summary of the Factors that Affect ISO 9000 Implementation and Benefits Gained according to a Literature Search and Practicing Quality Consultants in New Zealand

SURVEY FINDINGS - CERTIFIED AND NON-CERTIFIED COI\IPANIES

Characteristics of the Survey Respondents Awareness oflSO

9000

Reasons for Implementing, and Not Implementing, ISO 9000 Factors that Affect Implementation ofISO

9000

Benefits

The Certification Agent Quality Structure

Total Quality Management

Advice to Companies Considering Certification to ISO

9000

Summary of the Factors that Affect ISO

9000

Implementation and Benefits Gained according to the Certified Companies m New Zealand

CONCLUSION REFERENCES BIBLIOGRAPHY APPENDICES

APPENDIX 1 LIST OF SURVEY RESPONDENTS APPENDIX 2 EXAMPLES OF SURVEYS SENT APPENDIX 3 TABLES OF RESULTS

4 6 7 10 10 IO

13

14 14 28

31

34 34 38 41 45 67 85 90 97 101

108 118 122 127 128 128

136

159

. 6

LIST OF FIGURES AND TABLES TABLES IN TEXT

1 2 3 4 5 6 7 8 9 10 11

Responses Received

Survey Responses Received

Reasons for Implementing ISO 9000

Significant Factors that Help ISO 9000 Implementation Significant Factors that Hinder ISO 9000 Implementation Factors that Helped and Hindered ISO 9000 Implementation Factors that Helped Implementation of ISO 9000 in New Zealand Factors that Hindered Implementation ofISO 9000 in New Zealand Factors Ranked in Order of Perceived Affect on Implementation Ranking Elements ofISO 9000 for Ease oflmplementation Advice to a Company Considering Certification to ISO 9000

13 34 41 46 46 58 59 59 60 64 101

7

8 FIGURES IN TEXT AND APPENDIX 3

1 Size of Companies 3 5

2 Age of Companies 3 5

3 Respondents Title 3 7

4 Intentions with Regards to ISO 9000 Implementation 39

5 Level oflSO 9000 Sought 40

6 Motives for Implementing ISO 9000 -42

7 Proportions of Enlightened (Want to) versus Desperate (Have

to/Need to) 43

8 Proportions of Enlightened (Want to) versus Desperate (Have to) 43 9 Factors that Helped or Hindered ISO 9000 Implementation for

Certified Companies 4 7

10 Factors Ranked in order of Perceived Affect on Implementation 60 11 Did Implementation of ISO 9000 conflict with other activities on

site? 62

12 Ranking Elements oflSO 9000 for Ease of Implementation 64 13 Significant Benefits from Certification to ISO 9000 67 14 Benefits gained during the Implementation Process .. 70

15 Future Benefits Expected from ISO 9000 73

16 Problems solved as a result of Implementation ofISO 9000 75 17 Causes of Quality related problems remaining after Certification 78 18 Did Corrective Action, Management Review, etc Actually

Improve the Quality of their Product or Service? 82 19 Does Implementation of ISO 9000 Greatly Improve the Company? 83

20 Did the Certification Agency Help? 85

21 Behaviour of the Certification Agency 87

22 Do they have a Quality Assurance Department? 90

23 To whom does the "Quality Assurance Manager" report? 91

24 Who is responsible for Quality? 92

25 Help from a Consultant? 93

26 Who wrote the procedures? 95

27 Who wrote the Procedures versus Number of Employees (Size) 96 28 Do they currently follow Total Quality Management Philosophies? 98 29 Is Certification the beginning of Total Quality Management? 98

30 Future Intentions regarding Quality? 99

31 Advice to a Company Considering Certification to ISO 9000 I 0 I

32 Business Classification in A endix 3 162

9

TABLES IN APPENDIX 3

1 Responses Received 2 Size of Companies 3 Age of Companies 4 Business Line 5 Business Type 6 Location

7 Respondents Title

8 Have Non-Certified Companies Heard ofISO 9000?

9 ISO 9000 Certification Status

10 Time until Certification for Non-Certified Companies intending to implement ISO 9000

11 Reasons for Implementing ISO 9000

12 "The Enlightened (Want to) and the Desperate (Have to/Need to)"

13 Reasons for not Implementing ISO 9000 14 Factors that Help ISO 9000 Implementation 15 Factors that Hinder ISO 9000 Implementation

16 Factors Ranked in order of Perceived Affect on Implementation 17 Did Implementation ofISO 9000 conflict with other activities on site?

18 Ranking Elements of ISO 9000 for Ease of Implementation 19 Benefits from Certification to ISO 9000

20 Benefits gained during the Implementation Process 21 Future Benefits Expected from ISO 9000

22 Problems solved as a result of Implementation/Certification to ISO 9000 23 Causes of Quality related problems remaining after Certification 24 Did Implementation ofISO 9000 Improve the Quality of their Product or Service?

25 Did ISO 9000 Implementation Actually Improve the Company?

26 Did the Certification Agency Help?

27 Behaviour of the Certification Agency

28 Do they have a Quality Assurance Department?

29 To whom does the "Quality Assurance Manager" report?

30 Who is responsible for Quality?

31 Help from a Consultant?

32 Who Wrote the Procedures?

33 Who Wrote the Procedures versus Number ofEmployees (Size) 34 Have they heard of Total Quality Management?

35 Do they currently follow Total Quality Management Philosophies?

36 Is Certification the beginning of Total Quality Management?

37 Future Intentions regarding Quality

38 Advice to a Company Considering Certification to ISO 9000 39 Follow-u Surve Intentions with Re ards to ISO 9000